Posts Tagged ‘cloud computing’

If we needed further proof of just how far and fast the world of computing is changing, we note now the first ‘official’ recognition of the power of cloud computing in Microsoft’s recent business reorganization. Microsoft is essentially “downgrading Windows,” in the words of Jay Greene in an article in the March 30th edition of The Wall Street Journal.The firm has announced that Terry Myerson, who ran the Windows business, is leaving the company. His division, the More Personal Computing division, which includes Windows, saw its revenues increase by 2% (to $12 billion+), while Microsoft’s Azure cloud platform grew at a whopping 41% clip.

For over 40 years, Microsoft and Windows have been nearly synonymous, notes Greene. Now, Microsoft is reorganizing its business around its growing Azure cloud-computing operations and its Office productivity business. It’s part of CEO Satya Nadella’s willingness to shift Microsoft’s focus away from its traditional roots (e.g., Windows) in the gradual migration from personal computing to smaller, more mobile devices and the web.

Microsoft has grown its Azure operation into the Number 2 cloud hosting operation in the world, behind only Amazon Web Services. Meanwhile, its Office and Dynamics business software operations are growing rapidly and are already multi-billion dollar businesses. (Disclaimer: PSSI is an authorized Microsoft Dynamics partner.)

The Journal reports as well that Microsoft is breaking Windows into “pieces.” The platform technology upon which partners and ISVs build devices, apps and services will fall under the Azure business line, run by Scott Guthrie, in something called the Cloud + AI Platform, and will also include the Augmented Reality business that includes Microsoft’s Hololens device and the AI (Artificial Intelligence) business. Another division, known as Experiences & Devices will include Microsoft’s effort to develop new feature for Windows, notes the Journal.

It’s worth noting that today some version of Windows runs on more than 1.5 billion devices worldwide, and it still accounts for 42% of Microsoft’s revenues. That makes the recent decision all the more sweeping. Not that long ago, Windows was at the heart of the Justice Dept.’s monopoly suit against Microsoft that sought to break up the company, and to which the company eventually signed a consent agreement.

Speaking of this newest development, Brad Silverburg, who ran the Windows division back it’s seminal Windows 95 heyday, noted of the change engineered by Mr. Nadella that “He recognizes the world for what it is, not what it used to be.”

On November 11th China’s Alibaba, the nation’s largest provider of cloud infrastructure, posted record sales of over $25 billion in a single day – known in China as “Singles Day,” a national holiday dedicated to the nation’s singles population. The e-commerce shopping site hyped the day extensively, with 15 million products available from over 140,000 brands of merchandise. They processed over 800 million orders, at rates said to be on the order of 175,000 transactions per second.

That’s a big deal, reminding us why the cloud is a big deal too.

Alibaba dominates the Chinese cloud, with about 60% of that market, but U.S. firms still lead globally, led by Amazon Web Services and Microsoft. China won’t issue data center licenses for foreign customers, which gives local firms like Alibaba and Tencent Holdings a big leg up there. And it shows.

Last year Chinese automaker Geely, which runs its operations in Alibaba’s cloud, ran a one-hour marketing promotion that resulted in the sale of more than 2,000 vehicles. Clients like Geely know that Alibaba will spin up a lot of servers on short notice when they need the computing power. They can make 10,000 computers available in a half hour. Think about that. Even if you owned 10,000 PCs, it would take you longer than that just to switch them on!

If anyone doubts the coming dominance and rapid build-up of cloud infrastructure, take note that Alibaba is just one of a number of companies with a massive investment in a state-of-the-art data center on the banks of a huge artificial lake. It’s a massive complex that looks like a bit like a giant server itself. It sucks and pumps water from the lake to cool down its seemingly countless servers. Eventually the water runs through a canal and back to the lake. In winter, that water is actually used to heat the office. Amazon employs a similar approach in Seattle and also in Switzerland. Data centers in Scandinavia, Iceland and Greenland are or will be employing their geothermal landscapes to much the same purpose, keeping those servers cool and humming non-stop.

As to why it’s a big deal: this is how people shop now. China’s Singles Day event is proof of concept, where 500 million consumers now comprise its middle class. That will only grow. It’s already a $5 trillion market. And within about 4 years, it is predicted that China will account for about 60% of global e-commerce. Win China, and as Forbes Magazine recently noted, you win the world.

Despite our frequent and recent reminders about how everything is moving to the cloud, Robert McMillan, a reporter with the Wall Street Journal recently pointed out an unexpected security problem in the cloud. As more companies unplug their own data centers and rent from the likes of Amazon and Microsoft, they are discovering that they’re accidentally leaving their corporate date exposed for all the world to see.

It seems that configuration errors made while using cloud-storage services are common, according to security experts, and often occur when users set access permissions so someone outside the company can see the data. As Vincent Liu, a partner at computer security consulting firm Bishop Fox notes, “More data has been lost due to poor configuration than anything else on the cloud.”

One nonprofit foundation has tracked nearly 175,000 examples of misconfigured software and services in the cloud this year. While Gartner projects that the market for cloud-computing services will grow 17% this year, with cloud infrastructure leading the way, these are the very basic computer storage and networking services that are particularly prone to configuration problems.

Cloud computing initially caught on as part of cost-saving effort by corporate IT strategists that provided an end-around for what Mr. McMillan refers to as “stodgy corporate information technology departments.” Often they found it quicker simply to purchase cloud resources directly from someone like Amazon or Microsoft almost instantly. Rather than waiting for their IT departments to deliver timely information, they could test out new programs in minutes, with time bought on, say, their Amazon accounts.

The issue is that most cloud users don’t have the expertise to keep things secure. Such projects have become unsanctioned “shadow IT” projects. There was a lack of plan or governance model. Recently, IT departments are said to have begun to understand better when a company’s assets are online, when they need to be patched, and how they interconnect.

To correct these potential pitfalls, Amazon has introduced a new service to help companies stay on top of their infrastructure. Microsoft, utilizing its popular Azure platform, says it has several services to help clients protect sensitive data. (One of the speakers at Microsoft’s recent “Directions” conference which we attended in Orlando last week told us that the company spends $2.2 billion dollars on cloud security alone.) As a company spokesman noted in the Journal, “we continue to invest heavily in new innovations that build on our strength in cloud security.”

Security experts say one thing that might help is for cloud providers to help companies better determine when an employee is using a corporate credit card to purchase a new Amazon or Microsoft service. As Mr. Liu notes, “Provisioning is now in the hands of someone sitting in a cubicle who has a credit card and a web browser.”

Recently, another reseller (and good friend) who uses a trusted third-party to host about a dozen of their accounting software clients mentioned that most of those clients’ systems were down — for the third time in about as many months, including two in the past couple of weeks. Down as in, they-can’t-do-business down.

For various technical reasons, none of the clients could access the business management software they rely on to invoice clients, ship product or generally run their business. For the third time. The cause of failure differed each time, but really… does that matter?

I’ll tread cautiously here. We’re not luddites. Quite the opposite in fact. After all, we provide sophisticated software systems and custom-tailored business process improvement services to a wide range of small and midsize manufacturers and distributors. It’s all we do, and we’ve done it for nearly thirty years. It’s mission critical stuff. So we understand.

And we too believe that ultimately, hosted solutions ‘in the cloud’ are destined to be the future of most computing. It will evolve, just like the electrical capabilities of a century ago evolved into the grid we know today.

But then, there’s you. Our typical client, or prospective client, with a business to run.

When those dozen-plus clients of our friend went down, there was little anyone could do. And mind you, among a growing array of cloud providers, the one they relied on in this case was a good one, trusted, with experience and lots of other clients. Still, it happens.

I didn’t press for full details, but I know that some of those clients flat out lost business, could not invoice and/or could not ship. It was lost business. Maybe lost customers too, we don’t know.

But we’re all wise to remember a simple fact: the cloud is just some other guy’s computer. And computers fail. The fact that you have no idea where that guy’s computer is doesn’t make it any more helpful or secure. Now, the reason we’ll all migrate there eventually is because multi-point, colocation redundancy with rapid fail-over switching will become commonplace. Eventually. (This still won’t solve the problem of giving you cheap software that’s customizable to your requirements – but that’s a subject for a whole other post on the limitations of multi-threading and multi-tenancy.)

But had those servers and software been located at the client’s own site, redundant backup and power generation to a known server in a nearby location (like, just down the hall…) could have prevented this. Now imagine that you’re a manufacturer, and your shop-floor terminals that drive all your day’s production are now also dependent on that same cloud. So when you’re down, you not only can’t sell, you can’t make, either. That’s ‘down’ with an exclamation point. And a lot of people on your payroll just standing around, waiting.

A 2017 survey of over 300 companies by Colorado’s Panorama Consulting, Inc. tellingly revealed that cloud adoption for business management software actually fell compared to last year, with a decreasing percentage of adopters year over year.

The best advice for those intrepid pioneering customers is the age old adage: caveat emptor. You know what they used to say about pioneers being the ones up front with arrows in their backs.

Cloud is becoming a very profitable endeavor for its biggest providers. The deck is stacked in favor of a never-ending stream of revenues to the providers, and the race is on to be the biggest and the best. Just ask Amazon, Microsoft or Google.

All these companies know that in the long run they will make a lot more money from these recurring revenue streams than they were ever able to make, and sustain, selling software the old fashioned way.

As recently reported in the Wall Street Journal (10-27-16), expect the next wave of computing that will be widely adopted later this decade as the cloud grows more ubiquitous to be “serverless” computing.

The word is so new, spell-checkers don’t even know about it yet. As GE’s CTO, Chris Drumgoole commented, it’s what the “cool kids” are thinking about.

Serverless computing is the logical evolution of physical and virtual servers, where the servers used to run applications become invisible to the developers building applications. GE’s Drumgoole expects the technology to really take off next decade.

Serverless computing “allows developers to focus only on writing code without having to manage the servers” – essentially make the process “serverless” to the customer.

As the Journal’s Sara Castellanos describes it: “The provider runs the customer’s application on its own servers or inside “containers,” where they are broken into small pieces and placed into software shells, allowing the pieces to be distributed to any sort of device, in a digitally orchestrated manner, and at lower cost.”

Speculation is that customer IT departments might then “pay the provider every time their code is triggered, instead of doling out cash upfront for machines or virtual servers that they may not need.” This is not unlike the way Amazon (via AWS) and Microsoft (via Azure) offer up their own cloud services to users today.

It’s the logical evolution begun a few years ago as physical servers began giving way to virtual ones.

Pioneers in the area today already include IBM, Alphabet (Google) and Amazon Web Services. The AWS offering, called Lambda, allows software developers to write applications and upload their code to its service, where Lambda manages the code and runs it on AWS servers. It executes that code at scale and bills for every millisecond the code is triggered, thus eliminating the need for customers to buy or maintain any physical servers.

It’s all part of the continuing shift to the cloud. The Journal concludes by pointing out that “it is particularly useful when running applications for internet-connected devices such as Amazon’s Echo, because the apps require massive amounts of requests of short duration.”

A recent article in The Economist (Aug 30, 2014) reminds us again that companies are embracing the cloud much more slowly than its proponents had expected.

According to research firm IDC, businesses will spend about $100 billion on cloud computing this year. That sounds like a lot, until you put it up against the roughly $2 trillion that companies will spent overall on I.T. That’s about 5% of computing budgets, including large companies, going to the cloud. A bit underwhelming, considering all the press and the hype of the past few years.

The cloud promises and indeed probably presages a Cheap Revolution. It should make storage cheaper and cheaper, while bringing down the cost of managing applications. And indeed, for things like file storage and archiving, email and a host of web services it has.

But in other areas, inroads have been modest at best. In one of our previous (March 27th) posts, we noted Panorama Consulting’s recent survey that indicated that cloud usage in the ERP space had suffered a severe decline (of nearly 50%) in the past year.

Meanwhile, security foibles are certainly not helping cloud’s reputation. The recent and much ballyhooed scare over hacked celebrity photos from Apple’s iCloud, along with recent Internet outages at places like Facebook are not helping.

But in the long run, these are merely speed bumps. I’ve long held the view that the cloud is inevitable. More tangibly, the cloud will be to the 21st century what the grid was to the 20th: always on, ubiquitous, everywhere. It’s just a matter of time.

And in the short run? Probably, a hybrid-cloud solution makes the most sense. You utilize the cloud for the uses for which it’s optimized. Again, storage… backup… email… and an unending library of applications.

But for the business world, some things are just too valuable – and the cloud still immature and insecure – to risk it all. For these applications – and our specialty, ERP for manufacturers, surely fits this bill – local hosting still makes sense. If I’m a small business owner, I want to be able to walk down that hall, pat that server on its proverbial head, and know that my data and applications are right there where I can see them. With sufficient backup and power precautions, I know I’ll rarely be down for long, and I know my data can be kept safely where it is.

To be sure, precautions are necessary. I.T. providers exist for a reason you know. But at the end of the day, with my business on the line, I want my data secure, my applications local, and my business away from the eyes of snoops, hacks, even the government (nowadays).

Give cloud its due. Hybrid too. And local hosting. For everything there is a season.

Customers often look to us for preliminary guidance about cloud solutions. That makes a recent Wall Street Journal article discussing new concerns over the cloud timely.

Our stock answer of course is: it depends. At our own company, we have completely outsourced our Outlook email needs to a cloud based provider. For a minimal fee we have company wide access on multiple devices with pretty much 100% uptime. It’s saved our IT guy countless hours of updates and patches and futzing that would otherwise be required (and were required before) with a self-hosted Outlook. I can’t think of a single problem related to email cloud hosting that we’ve had. It’s a reasonable application for the cloud, and a mature one. It works. And frankly, even if it didn’t – for awhile – it wouldn’t be the end of the world or the downfall of the firm.

So for email, for backup, and for any number of non-mission-critical applications, it just makes good sense. Besides, as we’ve often noted, cloud will become to this century what the grid was to the last: ubiquitous and permanent. Just use it wisely.

But as the Journal article points out, for a business, there are issues you must think about. Nearly half of all small businesses today reported using the cloud. And about three-fourths of those manage that internally. But owners still need, notes the Journal, “to oversee a host of everyday IT operations around their own offices. And it introduces technical considerations they may never have thought of.”

The big one: speed. You’ll generally need more bandwidth. And not just download speeds, but upload speeds as well, especially if you’re storing lots of data online. There is a risk of significant lost productivity due to poor performance. One expert points out that a business needs “at least 3 MB of synchronous upload/download for every 10 users.” A conservative estimate at that, we’d say.

And you’re still going to be running a lot of in-house computers regardless, each with its own requisite support and hardware requirements. Just keeping up with the required security profiles alone may be enough to cause balding in a business owner.

Also worth noting is what protections the cloud company has in place, whether the data is mined for marketing, and how data is encrypted. And if a cloud provider suddenly folds its business due to economic pressures… well, let’s not even go there. Even if you wish to switch cloud providers, how exactly does your company data go from Point A to Point B?

For these and a host of other reasons, we find very few small business owners, once they’re informed of the perils, willing to risk putting everything in the cloud – like accounting, manufacturing and the like. Most cloud vendors offering such solutions today have proven to be challenged just to break even, though admittedly, it’s still early in the game. Eventually, we think, some of the connectivity and security issues will be surmounted, and one day (just not this one), the world of ERP will be ready to embrace the cloud more fully. It’s coming, to be sure. It’s just not here today, fully formed.